December 1, 2021

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Solid Rally Kicks Off Tech Week

Stocks jumped more than 1% on Monday for the second straight session, as we begin an eventful week that will see several earnings reports for tech giants and the end to an impressive bounce-back month.  

The Dow has a four-day winning streak and is back above 24K after surging 1.51% (or about 358 points) to 24,133.78. And the S&P is nearing 2900 with today’s increase of 1.47% to 2878.48.

The NASDAQ, uncharacteristically, underperformed the other major indices, but still jumped 1.11% (or around 95 points) to 8730.16.

Perhaps there’s some nerves as a few of the biggest tech names come to the plate over the next three days. Alphabet (GOOG) reports tomorrow, followed by Facebook (FB) and Microsoft (MSFT) on Wednesday and then Amazon (AMZN) and Apple (AAPL) on Thursday.

Interestingly, all of those names were down today except a 0.07% advance for Apple.

The market loves that more and more states are beginning to ease their stay-at-home orders and announcing gameplans for getting back to business.

We’ve gotten a lot of help from the Fed. We’ve gotten a lot of help from Congress. The market has recovered approximately half of its epic plunge this month. And, most importantly, the coronavirus spread has slowed.

It makes sense that some parts of the country would begin talking about re-opening and perhaps even taking some baby steps, especially since we’ve seen more than 26 million jobless claims in the past five weeks.  

The media and the public is understandably wondering whether such moves are too soon since the virus is far from being defeated. But we should probably also be saying…Good Luck!  

Let’s hope these states are able to start getting on their feet. It will help those areas significantly, and offer valuable ideas for opening the country’s hotspots that don’t feel comfortable making such moves just yet.

Today’s Portfolio Highlights: 

Value Investor: The number of people subscribing to wellness apps during this shutdown (e.g. Pelaton (PTON)) has convinced Tracey to get back into a previous winner for the portfolio. On Monday, she added WW (WW), which was sold from this service early last month for a gain of more than 33%. The company reports after the bell tomorrow, so the editor is taking a bit of a chance making this move today, especially after the stock recently surged off its lows. However, she believes WW can weather this economic storm better than most since its business is mostly online and employees can work from home. Plus, it has a good track record of beating quarterly results. Tracey will be paying particular attention to whether or not the company withdraws its 2020 guidance tomorrow as many others have already done. Read the full write-up for more on this new addition, including a look at its value characteristics. 

Commodity Innovators: Did you notice that there are dozens of tankers just sitting off the coast of California? That’s because the world is drowning in oil during this coronavirus shutdown with nowhere to put it. That means these transporters are now in the storage business… and being paid well for it. It’s a tailormade opportunity for an investor like Jeremy, who took advantage of this unique situation on Monday by adding DHT Holdings (DHT), which operates a fleet of double-hull crude oil tankers. This Zacks Rank #2 (Buy) is close to recent highs and the editor doesn’t believe it will stop. The portfolio also gets a dividend with the possibility of a special one in the future. He also sold the underperforming Invesco DB Commodity Index Tracking ETF (DBC). Read the full write-up for a lot more on these moves.

Technology Innovators: If we’re actually returning to business slowly but surely, then that’s great news for the beaten-down riding sharing space. Brian got a head start with some exposure to this area on Monday by playing both Uber and Lyft without actually buying either. Instead, the editor picked up Elastic (ESTC), a Zacks Rank #2 (Buy) search company with a set of software products that ingest and store data from various sources and formats. The editor calls this company the “backbone” of both those ride-sharing industry leaders because it helps track all the cars in those platforms. ESTC has a fantastic history of beating earnings estimates, including four straight positive surprises with an average beat of 19% in that time. The most recent report included 59% topline growth and solid revenue. Read the full write-up for more.

Surprise Trader: The portfolio is steering clear of any REITs that own office buildings or shopping centers during this crazy time… but data centers are a different story. This space is likely to prosper in a stay-at-home economy. Therefore, Dave bought a 12.5% allocation in QTS Realty (QTS), a Zacks Rank #2 (Buy) REIT that owns, develops and operates carrier-neutral, multi-tenant data centers. QTS reports tonight and has a positive Earnings ESP of 5.28%. He also sold Limelight Networks (LLNW). See the complete commentary for more. By the way, this portfolio had the best performer of the day among all ZU names as CURO Group Holdings (CURO) jumped 18.1%.

Black Box Trader: This week’s adjustment had a lot of winners, including three double-digit returns! The stocks that were sold today included:

• Newmont (NEM, +33%)
• Teekay Tankers (TNK, +31.4%)
• Sprouts Farmers Market (SFM, +15.6%)
• Eli Lilly (LLY, +2.6%)
• Intercontinental Exchange (ICE, +2.6%)
• Netflix (NFLX)

The new buys that filled these open spots were:

• BJ’s Wholesale Club (BJ)
• Dollar General (DG)
• Kimberly Clark (KMB)
• Scorpio Tankers (STNG)
• J.M. Smucker Co. (SJM)
• Kroger (KR)

Read the Black Box Trader’s Guide to learn more about this computer-driven service designed to take the emotion out of investing.

Have a Good Evening,
Jim Giaquinto

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